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As Bitcoin teeters near $70,000, analysts are closely watching a critical supply zone for the largest cryptocurrency. This range is crucial because it represents a key area where a substantial amount of Bitcoin was acquired.
Crypto analyst Ali has identified a key supply zone for Bitcoin, situated between $70,180 and $70,600, where over 450,000 addresses have collectively acquired approximately 273,000 BTC.
#Bitcoin encounters minimal resistance! The key supply zone to watch is between $70,180 and $70,600, where over 450,000 addresses acquired 273,000 $BTC. With strong support levels, the odds are in favor of the bulls! pic.twitter.com/ecdqbb414l
— Ali (@ali_charts) May 22, 2024
The supply zone is an important area on the price chart that often acts as a barrier to upward price movements. It is where a large number of Bitcoin was previously bought, and holders may look to break even or take profits, potentially leading to increased selling pressure.
Following a steady rebound from May 1 lows of $56,500, Bitcoin reached highs of $71,980 on May 21 before encountering resistance. At the time of writing, BTC was sustaining its declines from the prior day, down 1.91% in the last 24 hours to $69,998.
Potential scenarios
As Bitcoin approaches the highlighted critical supply zone, several scenarios could unfold:
If Bitcoin manages to break above the $70,600 level with strong volume, it could signal a continuation of the bullish trend. This would likely attract additional buyers, pushing the price higher and potentially establishing a new support level.
On the other hand, if Bitcoin faces significant selling pressure within this range, it could lead to a price rejection and subsequent pullback. This scenario would indicate that many holders want to realize profits, resulting in temporary resistance.
Another possibility is that Bitcoin consolidates below this range for a while. This would imply a balance between buyers and sellers ahead of a major price movement.
As Bitcoin considers its next move, price behavior around the $70,000 mark would be closely watched given the sheer volume of BTC accumulated in this area.
Based on the MVRV Pricing Bands, Ali believes that if Bitcoin continues to trade above $65,125, the next local BTC peak before a temporary drop around $77,593.